It’s an age-old question we receive, and to answer it requires that we start with the basics: What is a credit score, anyway?

Generally speaking, a credit score is a three-digit number ranging from 300 to 850. Credit scores are calculated using information in your credit report, including your payment history; the amount of debt you have; and the length of your credit history.

There are many different scoring models, and some use other data in calculating credit scores. Credit scores are used by potential lenders and creditors, such as banks, credit card companies or car dealerships, as one factor when deciding whether to offer you credit, like a loan or credit card. It’s one factor among many to help them determine how likely you are to pay back money they lend.

It's important to remember that everyone's financial and credit situation is different, and there's no "magic number" that may guarantee better loan rates and terms.

Although ranges vary depending on the credit scoring model, credit scores from 580 to 669 are generally considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent. Higher credit scores mean you have demonstrated responsible credit behavior in the past, which may make potential lenders and creditors more confident when evaluating a request for credit.

Lenders generally see those with credit scores 670 and up as acceptable or lower-risk borrowers. Those with credit scores from 580 to 669 are seen as “subprime borrowers,” meaning they may find it more difficult to qualify for better loan terms. Those with lower scores – under 580 – fall into the “poor” credit range and may have difficulty getting credit or qualifying for better loan terms.

Different lenders have different criteria when it comes to granting credit, which may include information such as your income or other factors. That means the credit scores they accept may vary depending on that criteria.

Credit scores may differ between the three major credit bureaus (Equifax, Experian and TransUnion) as not all creditors and lenders report to all three. Many creditors do report to all three, but you may have an account with a creditor that only reports to one, two or none at all. In addition, there are many different scoring models available, and those scoring models may differ depending on the type of loan and lenders' preference for certain criteria.

What Factors Impact Your Credit Score?

Here are some tried and true behaviors to keep top of mind as you begin to establish – or maintain – responsible credit behaviors:

Pay your bills on time, every time. This doesn’t just include credit cards – late or missed payments on other accounts, such as cell phones, may be reported to the credit bureaus, which may impact your credit scores. If you’re having trouble paying a bill, contact the lender immediately. Don’t skip payments, even if you’re disputing a bill.

Apply for credit sparingly. Applying for multiple credit accounts within a short time period may impact your credit score.

Check your credit reports regularly. Request a free copy of your credit report and check it to make sure your personal information is correct and there is no inaccurate or incomplete account information. You are entitled to free copies of your credit reports from each of the three major credit bureaus every 12 months by visiting www.annualcreditreport.com. By requesting a copy from one every four months, you can keep an eye on your reports year-round. If you find information you believe is inaccurate or incomplete, contact the lender or creditor. You can also file a dispute with the credit bureau that furnished the report. Remember: checking your own credit report or credit score won't affect your credit scores.

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